A feisty Gov. Mark Dayton climbed into the belly of the beast Wednesday, March 13, to tell critics in the business community that they have their facts wrong on Minnesota’s economy.

In perhaps the most in-your-face speech by a Minnesota governor since Jesse Ventura left office in 2003, Dayton accused those critics of partisan sniping because he’s a Democrat.

There’s a “disconnect” between chamber leaders’ perception of the state’s business climate and the facts, he told some 650 Minnesota Chamber of Commerce members during a luncheon speech in St. Paul.

“In their view, Minnesota is a bad place to do business, and I threaten to make it worse,” he said at the downtown Crowne Plaza Hotel.

Dayton argued that the opposite is true.

“Minnesota’s balanced approach to taxes and spending and investments in education make it one of the best places in the country — in the world, in fact — to live, raise a family and run a successful business,” he said.

Business leaders often call Minnesota a high tax-and-spending state, but Dayton cited independent studies that show the state has dropped from eighth highest in state and local taxes per $1,000 of income in 1996 to 15th highest in 2010, the most recent year for which data is available.

At the same time, he said, the state has gone from 11th highest to 25th highest in state and local government spending.

Dayton accused the chamber of failing to criticize Gov. Tim Pawlenty, his Republican predecessor, for failing to cut state spending.

“Evidently in your view, spending reform is only needed when a Democrat is governor,” he said.

Chamber President David Olson said after the speech that he was “a little surprised at how defensive (Dayton) was.”

He said the governor’s charge that chamber leaders only criticize DFLers was not true.

“We’ve been preaching for the last 10 years spending reforms — Republicans, Democrats and independent governors,” Olson said.

He said chamber leaders praised Dayton last week for dropping his proposal to tax business-to-business services.

“He could have owned the room,” Olson said, if he had told the crowd he had listened to their concerns and changed his policy in response, instead of scolding them.

Dayton also attacked a common business argument that “low taxes mean prosperity.” Instead, he said, the facts show low state taxes result in lower job growth and per capita income.

For instance, he said, South Dakota has the lowest taxes in the nation but ranks 44th in job growth. Minnesota, by one measure, has the 12th highest taxes and 12th highest job growth.

The governor outlined several elements of the revised budget he plans to submit to the Legislature on Thursday.

He reiterated he would not call for expanding the sales tax to business and consumer services. But he said that means he won’t have the revenue needed to reduce sales and corporate tax rates or freeze business property taxes, as he proposed in January.

Dayton said he is sticking to his plan to create a top income tax bracket for the wealthiest 2 percent of Minnesotans — those with taxable income above $250,000 for couples and $150,000 for single filers — and for a tobacco tax increase.

Dayton said his revised budget would generate $1.8 billion in new tax revenue, enough to erase a projected $627 million budget deficit in the next two years and allow him to “make significant new investments in education at all levels.”

He told chamber members he expects them to oppose his plan, adding: “All I ask is you oppose it with facts.”

Olson said chamber leaders oppose tax increases and are concerned about the lack of “spending reform” in the governor’s budget.

Bill Salisbury has been a newspaper reporter since 1971. He started covering the Minnesota Capitol for the Rochester Post-Bulletin in 1975, joined the Pioneer Press as a general assignment reporter in 1977 and was assigned to the Capitol bureau in 1978. He was the paper's Washington correspondent from 1994 through 1999, when he returned to the Capitol bureau. Although he retired in January 2015, he continues to work at the Capitol part time.

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